My Best Ideas (today!)

When people find out that I am in the investment business, it is not unusual for the conversation to turn to investments.  A lot of times I will get asked, “what is a good investment right now?”  Certainly, a tough question to answer without knowing the persons financial situation.  Depending on who you are and the resources you have, the answer could very well be a bank CD (not really, but it could be!)

However, I always felt I needed an answer (with caveats).  During the post-Credit Crisis environment, the answer I almost always gave was high dividend stock ETFs.  During that time that class of investment provided a low cost, diversified portfolio of income-generators with advantaged tax treatment for qualified dividends.  They also provided the potential for capital appreciation (upside) that was not likely from bonds.  And, most importantly, they provided a once-in-a-lifetime income rate better than bonds.  What was not to like?

I updated my analysis recently and found that this answer still works pretty well (see my blog post from February 27, 2019).  But, as we all know, things change and answers like these are subject to change.

Such is the case with another one of my favorite ideas:  the Corporate Income and Opportunity (PTY) closed end fund from PIMCO.  I wrote a blog post back on March 19, 2019 titled “A Non-Bond Bond Fund.”  PTY was trading at $17.21 per share back in March and it has rallied strongly since then to almost $19/per share recently.  Here is a case where the “value” equation takes precedence and something I said only two months ago is now “old news” and should be ignored.  Unlike stocks that can have unlimited upside, this particular closed end fund is trading way over its NAV and normal trading range at a 29.1% premium!  Maybe it will work out, but I am not buying!